| dc.description.abstract | Real property markets are well known for being remarkably imperfect. This
therefore, complicates investment decision making owing to the high risks
involved. This study addresses the problem of avoiding poor decisions by
recognizing the pitfalls likely to be faced by different types of investors.
Poor decisions in real property transactions are not likely to be merely
random occurrences, but mostly systematic behaviors by different types of
parties according to the roles that they play in the markets. The quality of
" decision making depends on the extent to which any type of party is able to , .'
come to terms with imperfect market environments. This study investigates
decision making trends that are likely to be occasioned by market
imperfections affecting different types of parties in different ways. The
objectives of the study are to investigate the types of parties in real property
transactions that are likely to make poor decisions and the extent of the
resultant losses.
Differences in figures from the three COl111nonmethods of valuation are
recognized as losses or gains to different types of actors in the real property
industry. This is because the methods give figures indicative of the' values
the main actors may give or-receive in respect of any property. The parties
are developers as indicated by the cost method, landlords and tenants as
indicated by the income method and buyers and sellers as indicated by the
sales comparison method
Properties numbering 398, already valued in the process of being bought or sold
over a period of not less than three years using the three methods are
randomly sampled out from 19 randomly selected estates of Nairobi. They .~
are then statistically tested for the existence of three patterns, theoretically
derived through literature review and market observations. The patterns are
related to three social-economically different zones of Nairobi and are
indicative of decision making trends by different types of parties namely,
developers, landlords and tenants, buyers and sellers, rich, middle class and
poor.
The main finding of the study is that the patterns of property values or
decision making trends are prevalent in most areas. The types of parties
which make gains or losses in each type of zone are identified and the
magnitude of the losses or gains estimated.
Policy makers are informed of the happenings in the markets. They are also
directed by the patterns to the markets in which they can intervene with
better taxation, subsidy, advisory and participatory policies. Investors are
informed of the consequences of investing in each of the differently
classified areas of the city and advised on better investment approaches.
Valuation professionals are given a better approach of assisting their clients
in making prudent transactional decisions. | en |
